Book Excerpt: 'Permission Wave': The Permission Economy

This is an excerpt from the new book "Permission Wave," a guide that shows businesses how to advance their e-mail campaigns by enhancing the personalization of their messages to customers. "The Permission Economy" describes the current trend of permission-based marketing and why enhanced personalization and relevance are needed for companies to survive.

The term "permission economy" describes a new paradigm of relationships between corporations and consumers. It replaces the old paradigm of centralized marketing, or what's called interruption marketing, with a new model where consumers dictate the terms of engagement with companies.

The Permission Economy is bottom up, with consumers deciding when, where and how they wish to be marketed to, as well deciding the nature and frequency of their marketing communications with companies. As a result, it is a democratic system, with consumers making decisions about when they wish to be marketed to.

The challenge on the part of marketers who understand the permission economy is not simply to find new and more shocking ways to blast their message into the minds of prospects, but rather to find new ways of understanding the needs of individual consumers; that is, finding new ways to learn about the interests, the needs and desires of prospects, members or readers, and then reshape their email marketing campaigns and other marketing efforts so they speak to those interests and needs. Of course, central to the concept of the Permission Economy is the idea of permission being granted to companies by the consumer. Companies cannot assume that this permission automatically exists just because a department has a phone number or an email address, for example.

Old school marketing defined. This stands in great contrast to the old school thinking about marketing, where companies assumed that they automatically have the right to mail, call, or fax any person at any time, for any reason. No doubt your own postal mailbox is frequently stuffed with various offers and catalogs, and chances are you never gave permission to most of those companies to actually send you something. In fact, in our society there is a general understanding that permission is not necessarily needed to send something to you via the postal service.

This has worked fairly well in the past, primarily because there is a significant cost factor involved in sending direct mail campaigns to customers. Thus, direct marketers who don't do very good job of targeting interests and needs are likely to put themselves out of business, because they would have to spend far more on producing the mail campaigns than they would receive in revenues. So it is a self-regulating system. However, when it comes to electronic marketing -- Web site and email marketing included -- these costs virtually disappear, disrupting that natural cost balance that puts a practical limit on the numbers of offers sent to postal mailboxes.

Let me explain this another way. What if postage were free and what if professional printing could be done at virtually no cost? How many direct mail offers would be sent via postal mail if this were true? Your postal mailbox would be stuffed with probably hundreds if not thousands of offers every single day the mail is delivered.

If marketers could reach you at virtually zero cost, more and more of them would be inclined to do so and the normal risk associated with missing targeted prospects would be very low. To put it yet another way: the lower the price of conducting marketing campaigns, the broader the reach most marketers will strive for.

As we have learned in the Permission Economy, the whole idea of being bombarded with an increasing number of offers from a larger and larger set of marketing professionals and companies does not appeal to end-users. The word "spam" accurately describes this phenomenon in the minds of email users, who naturally don't appreciate receiving hundreds or thousands of irrelevant marketing messages in their email boxes each and every day.

So, in contrast to the old school marketing economy, the Permission Economy demands that marketers stop shotgunning their marketing efforts. Instead of trying to contact every person on the planet with a special offer, they need to ask for permission from consumers. Then, when that permission is granted, marketers need to honor it.

Rules of the permission economy. This is a major sticking point (and a strong area of contention) between old school marketing and permission marketing. In the old days of mass marketing, when one company acquired a customer's name and address, it was generally assumed that they not only had the right to mail you materials, but that they also had the right to sell that name to other marketing companies, which would subsequently send you even more materials.

Very few people questioned this and an entire industry grew out of it. The Mailing List Rental industry is a multibillion-dollar industry and even today, as we are entering the Permission Economy, the names and addresses of people across the country and around the world are being sold and resold to marketers on a daily basis.

In the Permission Economy, however, companies do not have the right to resell permission to contact customers or individuals. In this economy, when a company is granted permission by an individual, that is an exclusive right. It only concerns the level of permission between that individual and that one company. It does not imply permission to share that information or sell it to other companies.

This single point, of course, drives old school marketers crazy because they are operating on a belief system that is now outdated; but if you are going to be successful operating in the Permission Economy, you must understand that permission is nontransferable. If you are to market to an individual customer, you must obtain their permission directly, and you must honor that permission by refraining from selling or renting their email address or other contact information.

A whisper beats a roar. The Permission Economy is also personal. It demands that companies speak directly to individuals, not to the masses. To illustrate this, let's describe some of the key differences between interruption marketing and permission marketing.

If you are driving by a billboard and you happen to glance at that billboard, it may serve a particular message to you. But that billboard serves the same exact message to anyone who drives by, so it is not personal and it may or may not speak to your interests. This is why most billboards are largely irrelevant to most of the people who drive by. Billboards are of course quite large, so it is hard not to notice them if you are driving down an interstate.

Because billboards are relatively inexpensive to build and maintain, and because they offer exposure to so many people, they only need to be marginally effective to pay off. If just one out of every 10,000 people driving by a billboard actually takes action and visits the restaurant or hotel being advertised, for example, then that billboard pays for itself many times over.

A billboard on a Web site is of course a banner ad, and banner ads serve the same message to people no matter who is looking at it. This is why non-targeted banner ads have failed. They are only being used by those who have not yet figured out that content-sensitive, pay-per-click advertising is a far more targeted and effective means of delivering relevant messages to readers.

Email is the perfect permission medium. In contrast to billboards and banner ads, email can be very personal. Email is a one-to-one marketing medium. With email, you can deliver a message directly to each individual, and that message can be personalized to speak to the interests, needs, and desires of that individual. It can also contain personalized elements such as the person's name, address, account status or other details. Messages can even be customized with dynamic content technology, which allows the text or graphics of a message to vary based on the interests of each recipient in your email list.

This level of personalization is characteristic of the Permission Economy. In a sense, when consumers grant you permission to communicate with them, they are doing so with the premise that you adhere to certain rules. One of the main rules is that you speak directly to the consumers, not to the masses, because if your message is irrelevant then your permission will eventually be revoked. As a company, you will no longer be able to communicate with an individual who revoked their permission (by unsubscribing, for example).

The Permission Economy survives democratically. Consumers vote with their attention and their dollars. If you don't treat them right, if you don't respect their intelligence, if you don't speak directly to their interests, they will vote you out of existence. To be successful in a democratic system, you must have messages and methods that respect and honor your audience.

EXTENDED DEADLINE

You have until Wednesday, December 7 to get your entries in. Learn more here.